In a free market society, many factors influence the eventual price of goods. For example, supply and demand are two common market forces that influence the final price of goods. However, in modern retail schemas it is the retailer who responds to these forces and formulates a final market or retail price for an item.
With the recent improvements in technology available to retailers, multiple techniques have been introduced to help assist a retailer in readily setting a retail price. One example of a device created to assist retailers in promoting sales of products is described in U.S. Pat. No. 5,933,813, entitled “Sales Promotion Data Processor System and Interactive Changeable Display Particularly Useful Therein,” which issued on Aug. 3, 1999 to Teicher et al. The sales promotion system set forth in that document is a retailer tool for use in promoting sales, which includes an interactive electronic display, whereby various prices and promotions may be displayed for customers.
Likewise, a similar retailer tool is described in U.S. Pat. No. 6,012,040, entitled “EPL Price Change Verification System and Method,” which issued on Jan. 4, 2000 to Goodwin, III. The electronic price label (EPL) system described in that document is a retailer tool that allows the display of prices to be readily changed by way of computer so that a retailer may effect changes in prices instantaneously for customers. Both of the above-mentioned patents, however, are primarily concerned with technology for displaying prices or promotions, and neither of these patents describe how one arrives at these prices or promotions.
U.S. Pat. No. 6,223,163 entitled “Method and Apparatus for Controlling Offers That Are Provided at a Point-of-Sale Terminal,” which issued on Apr. 24, 2001 to Van Luchene, describes a method for calculating and transmitting pricing to be displayed on a point-of-sale (POS) terminal. Specifically, the prices displayed on the POS terminal in this patent are determined according to performance parameters associated with a number of offers. For example, acceptance rate, profit rate, or velocity of sales are some performance parameters that may be measured to adjust pricing displayed on the POS terminal by way of changing the promotion plan associated therewith. However, this patent does not describe a technique whereby manufacturers and retailers may both contribute inputs to an overall price model.
Traditionally, price models for various promotions are arrived at as manufacturers and retailers enter into a complex contractual agreement, and undergo a series of information exchanges for auditing purposes. It is not permitted under law, however, for a manufacturer to fix resale prices. Thus, a manufacturer, while allowed to promote a product by way of special promotional activities, is not allowed to set the retail price of products. This final retail price determination is left to the retailer.
Because the manufacturer's ability to promote its products relies heavily upon contractual agreements and personal communication with the retailer, there is a great deal of trust involved between them. When this trust is broken the retailer may profit improperly at the manufacturer's expense. One example of such a breach occurs when a retailer, despite agreeing to implement a rebate promotion, does not implement the promotion but profits by charging the full price for the promotionally supported product and then collecting the rebate payment from the manufacturer for that product.
Such breaches of trust and other fraudulent activities are difficult to detect because auditing procedures also inherently require a certain amount of trust between a retailer and the manufacturer. In the example given above, if a retailer takes advantage of a rebate promotion from the manufacturer, the only records which may be used to verify the retailer's claim for the rebate belong to the retailer itself. Thus, dishonest or unscrupulous retailers could take advantage of such a situation and could fabricate, manipulate, or conceal the records required by the manufacturer to audit the promotions.
In addition, traditional promotions schemas are subject to error other than fraudulent or deceptive practices. For example, if a company unintentionally delays implementation of a promotion for a few hours, the result could be a large unwarranted sum of money being paid from the manufacturer to the retailer without the savings being passed on to the consumer as contracted for by the manufacturer. Such an unintentional delay could occur, for example, as the result of a key employee being absent or late for work. Some estimates indicate that even the most conscientious companies have a compliance rate of less than 95% with such promotional pricing contracts.
Therefore, it is desirable to provide a system and method that allows effective implementation of manufacturer-based promotions, while avoiding potential legal problems by separating promotional offers, which come from a manufacturer, and the fixing of the final retail price for goods, which must be done by the retailer. Moreover, it is desirable for such a system to be convenient for both the retailer and manufacturer, and effective from the viewpoint of the consumer, while preventing any fraud in implementing promotional offers. Such a system and method should be implemented in a manner transparent to the consumer and convenient for both the retailer and manufacturer. That is, such a system and method should not be overly obtrusive to the customer and should readily mesh with the customary practices of the manufacturer and retailer, involving minimal effort from these parties. Furthermore, such a system should provide enhanced auditing capabilities for verifying proper implementation of manufacturer-based promotions by the retainer.